Entertainment

04/07/2016

App Annie just released its "2015 Gaming Report" and gaming on mobile devices widened its lead over other platforms in terms of spend, comprising 40% of all consumer spending on games for the year 2015. The reports key findings are summarized below.

Key Themes & Takeaways: Gaming Trends

Mobile gaming overtook both home game consoles and combined PC and Mac gaming in consumer spend for the first time in 2014; the gap widened in 2015 and shows no signs of slowing.

Games continued to have the majority share of worldwide consumer spending on both Google Play and the iOS App Store, with each store seeing incremental year-over-year gains in gaming-related share of consumer spending.

Home game console spending was disproportionately high in North America and Western Europe. Mobile game and PC and Mac game spending was centered in Asia-Pacific and shifted further in that direction in 2015. Asia-Pacific in particular saw explosive growth in share of consumer spending on the iOS App Store.

The top revenue-generating titles on mobile were actually more stable year-over-year than those on handheld game consoles (partly due to handheld games being sold in physical packaging).

Home and handheld game consoles declined marginally in consumer spend from 2013 to 2015.

Home game consoles saw the highest consumer spend per device in 2015 at nearly 5x that of mobile games. However, given their broad appeal, mobile games have a much larger user base and therefore monetize higher overall.

Worldwide Consumer Spending on Games by Device for the Years 2013-2015

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Mobile gaming overtook both home game consoles and combined PC and Mac gaming for the first time with the highest consumer spend in 2014.

Mobile gaming’s lead continued to widen in 2015 over PC and Mac gaming, home game consoles and handheld game consoles.

Worldwide Consumer Spending Shares on Games, by Region, 2015

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Asia-Pacific gained in share of game spending for iOS App Store and Google Play combined due to iOS’ explosive growth in China and the healthy growth of all major APAC markets.

Asia-Pacific also gained in share of consumer spending for both handheld games and PC and Mac gaming.

Home consoles didn’t see much growth in Asia-Pacific despite the 14 year ban on consoles in China being lifted in 2015. Western Europe showed growth in home game console spending in 2015.

Top 5 Worldwide Grossing Portable Games, by Platform, 2015

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Worldwide Game Spending Per Gaming Device, 2015

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Home game consoles far and away led other gaming mediums in consumer spend per device.

Mobile gaming saw the smallest consumer spending per device, but had the largest gaming base, reaching not only core gamers but also a significant amount of casual gamers who may not otherwise play games.

Key Themes & Takeaways: US Gamers

There was practically an even gender split within both the mobile gaming (Android Phone and iPhone gamers) and PC and Mac gaming communities in the US in 3Q 2015. Related games represent a great opportunity for marketers to reach both male and female customers.

In 3Q 2015, PC and Mac gamers skewed toward those aged 45+, handheld and console gamers skewed towards those aged 13–24, and mobile was more evenly distributed with the largest age bracket being 25–44.

Android phones trailed significantly behind the other gaming platforms in typical hours of gameplay per week. (Such gamers spent less than one-third the time of those on home game consoles, handheld consoles and combined PC and Mac.)

Appealing to a broader user base, which includes non-traditional and casual gamers, US Android Phone gamers played less time per person per week. Gamers on other devices had much higher weekly gameplay hours per person.

US Gaming Device Demographics, by Gender, 3Q 2015

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Males and females were represented evenly among US iPhone and Android Phone gamers and combined PC and Mac gamers.

US home console gamers skewed male (approximately 59%) in 3Q 2015.

Handheld game consoles in the US skewed the strongest female (approximately 53%) in 3Q 2015.

US Gaming Device Demographics, by Age, 3Q 2015

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PC and Mac gaming skewed older than other US gaming devices in 3Q15 with about 59% aged 45+.

Handheld game consoles had the largest share of young American gamers at 36%+ under 24 years old in 3Q 2015.

US mobile gamers were strongest in the 25–44-year-old bracket at about 40%.

US Gaming Device Demographics, by Hours of Gameplay Per Person, 3Q 2015

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US Android Phone gamers played less than 3 hours per week on average in 3Q 2015. (This mobile gaming community is larger and includes a significantly higher share of casual gamers.)

41% of PC and Mac gamers played less than 5 hours per week versus 22% on consoles.

14% of PC and Mac gamers played greater than 20 hours per week versus 8% on consoles.

Key Themes & Takeaways: Wrap-Up

Mobile gaming surpassed both home game console and PC and Mac gaming to become the top global platform by consumer spending in 2014, furthering this lead over other gaming devices in 2015. Mobile gaming grew to over 40% of total consumer spend on games last year, up from about 35% in 2014.

More than 80% of combined iOS and Google Play consumer app spending in 2015 was derived from games, which enjoyed significant spending growth. On iOS, this share topped 75% in the second half of 2015.

The Asia-Pacific region saw the greatest growth in share of game consumer spending worldwide on iOS and Google Play app stores, handheld gaming, and combined PC and Mac gaming, a testament to the cultural gaming tradition of many countries in the region as well as the ongoing expansion of China as an increasingly large and viable market for game monetization.

Home console gaming saw more than double the consumer spend per device than any other gaming platform. Mobile gaming saw the lowest consumer spend per device, but had the largest audience, giving it the highest overall consumer spend in 2015.

In the US, there is a significant opportunity across all platforms to attract male and female gamers. Console gamers skewed decidedly male. Android Phone and iPhone along with PC and Mac gaming represented near-even gender divides for gamers.

Across handheld, PC and Mac and home console games, users spend roughly the same amount of time per week playing games on average.

PC and Mac gamers have much more variance in the amount of typical gameplay per week compared to home console gamers, with almost double the size of the user base at both extremes (less than 5 hours per week and greater than 20 hours per week).

Hours of gameplay per user per week on Android phones was significantly lower than other gaming platforms, a result of the wide appeal and broadened user base from casual gamers.

Courtesy of an article dated March 29, 2016 appearing in App Annie Blog

04/05/2016

Facebook CEO and co-founder Mark Zuckerberg having fun test driving the new Oculus Rift VR headset after its launch last month. (Click Image To Enlarge)

VR hardware makers seem to know that, for now anyway, it's in their mutual interest not to tear each other down.

Competition in the video game world can be pretty cut-throat—they don't call it the console war for nothing. Whenever a new generation of home video game machines emerges, it sometimes almost feels as though the manufacturers—behemoths like Microsoft, Sony, and Nintendo—delight in trying to eviscerate each other.

But at the moment, the virtual reality world is a bit different. With the first Oculus Rifts showing up on doorsteps today, four years after one of the most famous Kickstarter campaigns of all time, the consumer virtual reality era truly begins. But instead of mirroring the video game industry’s pitched battlefronts, VR hardware makers seem to know that, for now anyway, it's in their mutual interest not to tear each other down.

Richard Marks, who heads up VR efforts for Sony, says.

"The attention Oculus brought to VR was great. The fact that there are multiple VR platforms all coming to market, that is really good for the timing of VR, because it does create more of a critical mass. It is challenging for any one platform to create a new medium."

That’s a sentiment I hear again and again during conversations with leading VR community figures. What’s clear is that industry insiders believe consumer virtual reality needs to get off the ground before major players can start worrying about which company will "win" the medium.

Anthony Batt, the cofounder and executive vice president of Wevr, a leading virtual reality content production company, says.

"This reminds me of the early days of the Internet. Everyone’s best interest right now is to grow the pie so VR becomes a widely adopted industry."

Oculus Rift VR headset (Click Image To Enlarge)

Virtual reality, of course, is not a new technology, having been around in one extremely expensive form or another for decades. But with the arrival of the $599 Rift, HTC’s $799 Vive next month, and Sony’s $399 PlayStation VR in October, we’ve reached the point where deeply immersive, high-fidelity, high-quality VR experiences are actually arriving in people’s living rooms.

Although the Vive at launch will outpace the Rift by including a set of sensor-laden hand-held controllers that lets users see and incorporate their hands in 3-D VR games and other experiences, Oculus is expected to soon keep pace when it releases its Touch controllers later this year as a separate product.

Google's Cardboard DIY headset is made out of cardboard (Click Image To Enlarge)

FEW EXCLUSIVES -- YET

The dawn of this age comes with big expectations. Analysts at Digi-Capital predicted last fall thatVR would be a $30 billion industry by 2020, while Piper Jaffray pegged the value of VR content—everything from games to rich cinematic experiences, live events, real estate applications, surgical training tools, and more—at $5.4 billion by 2025. There are already hundreds of VR experiences available for platforms like the mid-range Gear VR—which is powered by Oculus software—and low-end Cardboard, but if one thing is clear at this moment in VR’s evolution, it’s that the industry will go nowhere if there isn’t a steady flow of great new content at every quality level, and at least some level of mutual support. Beating the other guy today isn’t the primary motivation.

"For so many people in this industry, VR has been this childhood dream of nerds and sci-fi fans, and of course, VR had a couple false starts in the past. So most people think the biggest risk is that VR will not work, not be good enough, not gain wide adoption, and think only a secondary risk [is] that their competitors get a better position."

Nick DiCarlo, the vice president and general manager of immersive products and virtual reality at Samsung, maker of the Gear VR, concurs.

"Right now, the VR industry is much more focused [on] building awareness of VR as an idea, and how cool it is, rather than competing. The VR community really works together to build . . . momentum in the space."

While it’s unclear if companies like Oculus (which Facebook bought for $2 billion in 2014), HTC, Sony, and Google are actually and actively cooperating with each other, many industry experts say their impression is that those companies are mostly playing nice with each other at this point. In the video game industry, one mark of the cut-throat attitude between competitors is their thirst to be the only platform on which big-name game titles are available—especially at launch. But with a few notable exceptions, such as Minecraft and Rock Band being available only for the Rift, or Gran Turismo launching solely on the PlayStation VR, that doesn’t appear to be happening much in the VR world.

Linc Gasking, the cofounder and CEO of 8i, a developer of VR production technology, says

"For Oculus to succeed, VR needs to succeed, and everyone is in it together. You see that playing out more and more, where the big [hardware makers] are not asking for exclusivity on content yet, which really helps that process."

Gasking reasserts, pointing out that at this early stage,

"The success of VR floats all boats. VR is the platform, not any individual device."

"I’ve seen a lot of collective support from one another in the community. I haven’t seen [platform makers] walling their gardens off. . . . We haven’t seen anyone saying 'we want an exclusive on this for us, and you can’t do it for others.'"

When asked on Twitter about the possibility of Oculus or Sony having exclusive content, Oculus founder Palmer Luckey responded,

"I am glad Sony invests in the VR ecosystem, and encourage others to do the same!"

Another reason why VR companies haven't been chasing exclusives as hard as they do on the traditional video game console front is that they are keenly aware that bad VR experiences on any platform or any device can turn people off to the entire technology forever. That’s especially troubling to executives if the person who has the bad VR experience is a decision-maker at a Hollywood studio or an ad agency. Those people, after all, are the ones who have the budgets to finance big VR projects, the very projects that will become a financial lifeblood for this nascent industry. All the virtual reality hardware makers need fantastic developers to create fantastic content for their devices.

That said, though consumer VR is still in its earliest stages and no one really knows how large the businesses being built around it will get, there’s no shortage of work for people developing VR content. Milk argues.

"The thing now is that there’s more work than any of us can handle. We’ve had to learn how to say no, because in the last few years, we’ve gone from banging on doors and saying, ‘You should do something in VR, this is going to be really important,’ to everyone with a marketing budget banging on our door saying, ‘We need to do a virtual reality experience.’"

Gasking agrees that VR has reached the phase where people are desperate not to miss the boat, despite the fact that most of the consumer hardware is only just starting to come online. Gasking says.

"We’re seeing all the increase in press create a surge of interest. We got a FOMO call from an ad executive concerned his clients were missing out on the VR wave and wondering how to start to buy advertising for his clients."

There's yet another reason why VR hardware makers may also be more flexible about exclusivity right now: They really need developers who produce games (such as Half-Life and Mortal Online) that are already wildly popular on non-VR platforms to create VR versions that can quickly draw customers to their devices. So, in some ways, VR hardware makers need established game developers more than established game developers need the hardware makers.

THE LOOMING VR CONSOLE WAR

Make no mistake, however: Hardcore competition between the likes of Oculus, HTC, Sony, and others may already be bubbling beneath the surface.

One reason, says Jeffrey Greller, an agent at William Morris Endeavor who specializes in VR, is that because hardware like the Rift and the Vive is expensive—especially when many buyers will also have to purchase a gaming-quality PC to power their new gear—consumers are likely to pick one platform and stick with it.

Greller says.

"Once you’ve committed to a hardware platform in VR, it’s going to be very difficult for another hardware brand to have you purchase their technology."

That could very well end up being a problem on the higher end of the VR spectrum; devices like Samsung’s Gear VR, Google’s Cardboard, and others are substantially cheaper than the Vive and the Rift.

And, since the Rift and the Vive offer very similar features, that’s where the really heavy competition is likely to brew, posits Bruce Wooden, the head of developer and community relations at VR development company AltSpaceVR and the cofounder of conference and meetup organizer Silicon Valley Virtual Reality.

Wooden said.

"If there’s any kind of competitive spark at this stage, it would have to be between Oculus and HTC. They have two high-end headsets that are generally targeting the same audience."

Still, while he notes that it’s "unavoidable" for there to be some level of competition in the VR industry, it’s not even close to the ferocity of the console wars. At least not yet.

In the meantime, today’s launch of the Rift and the imminent launches of the Vive and PlayStation VR can only be a good thing for the broader VR ecosystem, especially because each of those systems, along with lower-end platforms like Gear VR, Cardboard, and others, together meet the full range of people’s VR needs.

Sony's Marks said.

"Having multiple platforms in VR is good, especially at this early stage. Serving the customers of those platforms with VR in [each company’s] unique way makes sense."

So are all the big VR companies actually rooting for each other?

Dixon said.

"I think they are. Obviously, Oculus and Valve and everyone want to be the leader. But I think everyone agrees that for the next few years, [the most important thing] is that everyone succeeds."

(Neither Oculus, Google, nor HTC would comment for this story.)

COMMENTARY: Virtual reality could be big soon. Augmented reality could be bigger, but might take longer to get there. How big and how soon? Let’s look at what we learned in the last year and how that changes the mix and timing of AR/VR forecasts.

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Timing Is Everything

At the start of last year it looked like consumer AR could launch in 2016. AR now appears largely focused on enterprise users this year, with most consumer AR expected to launch around 2017 (although wild cards like Magic Leap could change that). This effectively pushes AR consumer market revenue back by 12 months, with AR now forecast to hit $90 billion by 2020. VR’s topline remains largely unchanged, with $30 billion forecast by the end of the decade. The timing change also moves the tipping point for AR passing VR from 2018 to 2019. So where our internal numbers hit similar revenue to last year’s forecasts, they now do so a year later.

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Mobile First

We now know that the CPU/GPU requirements for high-end VR come at a premium. Sony Playstation VR and mobile VR (from Samsung and others) are expected to be the initial consumer VR market drivers, changing installed base forecasts in favor of mobile VR. There isn’t a material impact on topline VR revenue forecasts, but the revenue mix looks a bit different by sector. VR largely remains an entertainment market driven by hardware, games, video and theme parks, with non-entertainment apps driving a meaningful minority of revenue by 2020 as the market develops. (See original VR sector approach here)

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Changes to consumer market launch timing had a significant impact on topline AR forecasts, but the sector mix looks broadly similar to last year’s numbers. AR hardware revenue will drive the market, followed by augmented commerce, data, voice, video, enterprise, theme park, advertising, apps and games revenues. (See original AR sector approach here)

Go East, Young Man

The weight of innovation for AR and VR is in America today, with an unsurprising bias towards the West Coast. There are significant concentrations of development in Asia, with the Chinese market in particular giving rise to many home grown competitors. Where higher than average AR/VR revenue per user is likely to come from North America, Western Europe, Japan and South Korea, installed base is generally the ultimate driver of long term revenue. Combining our forecasts by sector and country/region indicates that Asia (China, Japan, South Korea, others) could drive AR/VR revenue by 2020, followed by Europe and North America. This geographic potential has not escaped the notice of entrepreneurs and investors, as everyone tries to figure out where to place their bets.

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Plus ça change, plus c’est la même chose

What does this mean for established players and startups? The short version is that everything has changed and nothing has changed. Despite Apple buying Metaio, it might take 18 to 24 months for a consumer market large enough for it to enter. Facebook, HTC/Valve, Sony and others will push forward with PC/console VR, as Facebook now explores AR in parallel. Samsung (with Facebook) and dozens of competitors will drive mobile VR. Google’s friends Magic Leap will do what they’re going to do, as Microsoft, ODG and others focus on Enterprise AR in 2016 ahead of consumer AR next year. Mobile VR will see hardware prices fall driven by Chinese competitors like Letv, and everyone hopes Moore’s Law brings high-end VR within reach of the average consumer.

The direction remains the same, it’s just a question of timing. We’ll keep updating as hard market data becomes available this year.

We’ve been talking about Windows 10 for over a year now and today we started our next chapter, with new devices designed for Windows 10.

Today I stood on stage in NYC along with members of my team and had the honor of unveiling a new era of Windows 10 devices from Microsoft. We introduced new Surface, Lumia, and Band devices and shared the latest from HoloLens, and Xbox. I’ve been using these devices for months and couldn’t wait to share them with you today.

Windows 10: Off to the Hottest Start in History

In just a few short months, it’s been incredible to see more than 110 million devices already running Windows 10. I’m personally humbled and excited to see people around the world loving Windows 10. Thank you for your feedback – the team and I love reading it and using it to help us shape the future of Windows.

I’ve also been thrilled to see the response from developers and people enjoying everything our new Windows Store has to offer. With over 1.25 billion visits, developers are seeing the benefits – with developer revenue per download increasing four times since Windows 10 launched. This early activity is attracting new universal Windows apps to Windows 10. Today, we announced Facebook will be building universal Windows apps for Facebook, Instagram, and Facebook Messenger. And, we’re excited to welcome new universal Windows apps for Box, Candy Crush Soda Saga, Flipagram, NASCAR, Uber and many, many more.

New Windows 10 Devices from Microsoft

Our approach to hardware is to create and reinvent categories – like we did with Xbox and Xbox Live, with Surface being the tablet that can replace your laptop, with Lumia and Continuum, with Surface Hub, and of course with HoloLens being the only platform enabling you to mix holograms into your world.

Today, we unveiled a range of new devices, all built to make the most of Windows 10:

Surface Book – the new, ultimate laptop from Microsoft brings together best in class performance with the versatility of pen and touch.

The Surface Book includes a 13.5-inch display with a pixel density of 267PPI. That display is optically bonded to the glass, which means it should look good. Microsoft says the Surface Book is housed in a machined magnesium body — basically, it's a silver metal laptop, but it manages to look far different than a MacBook, despite its similarities in name. Perhaps the standout design element here is the Surface Book's hinge. Microsoft calls it a "dynamic fulcrum." From the side, it appears to almost flex as it bends. It leaves a slightly awkward gap when the Surface Book is fully closed, but it also elevates the display at an angle when the screen is flipped around for use as a tablet. A button on the side releases the display, which detaches from the top of the hinge.

Microsoft says the Surface Book is for someone who wants a bigger screen and "the perfect typing experience" of a laptop. For one, that includes a backlit keyboard. There's also deeper keys, with 1.6mm of travel. Microsoft is kind of freaking out about this keyboard. It's calling it "perfect" and saying it'll type almost silently. Beneath all that, the Surface Book includes a glass trackpad with five points of touch sensitivity.

The Surface Book will work with Microsoft's Surface Pen stylus as well. As for why you'd want to use this device as a tablet, Microsoft is talking about it as a "digital clipboard." That's not the most compelling phrase, but it's really everything that the Surface line has always been: a very powerful tablet that runs desktop Windows. This one just happens to do a much better job of transforming into the laptop that it really wants to be.

On the inside, the Surface Book has the latest Intel Core i5 and i7 processors, from the Skylake family. There's also an Nvidia GeForce GPU with GDDR5 memory, however that's located in the base, so you'll need to keep the display docked to tap into its power. The dock also includes two USB 3.0 ports and an SD card slot.

All together, the machine is supposed to keep running for 12 hours on a single charge. Microsoft claims.

"Ounce-for-ounce, pound-for-pound, this is the fastest 13-inch laptop ever made anywhere on any planet."

The Surface Book will go on sale October 26th with prices beginning at $1,499. Preorders will begin October 7th.

Surface Pro 4– the tablet that can replace your laptop just got thinner, lighter and faster.

The Surface Pro 4 is now official, and it's thinner, lighter, and more powerful, while also having a larger display than its predecessor. Intel's Skylake processors and Microsoft's own Windows 10 are at the heart of the Surface Pro 4.

Panos Panay introduced the Surface Pro 4 by reminding us how transformative this line of devices has already been:

"This challenge of the tablet and the laptop... which do you buy? Remember that problem? It's gone."

There's a fingerprint sensor on the keyboard and Cortana integration inside the new tablet, which fits a 12.3-inch display in the same physical footprint as the older 12-inch device. The Surface Pro 4 is therefore compatible with existing keyboard accessories, though Microsoft has done a ton to upgrade its keyboard covers this year. And yes, there's an all-new Surface Pen as well, which also has an eraser on the end of it. The new pen has 1,024 levels of pressure sensitivity and attaches magnetically to the side of the Surface Pro 4 when not in use. It comes in a variety of colors and even has Cortana integration: you can activate Microsoft's voice assistant by holding the button on the stylus.

Microsoft says this is the "thinnest, most powerful" Intel Core PC ever shipped and it's "not even close." To make that possible, the company has tweaked and optimized multiple aspects of the design that are invisible to the user, such as the 0.4mm-thick Gorilla Glass 4 covering the front. Microsoft has even developed a special G5 chipset to run the optical stack. The promise is that this is the best, most natural touchscreen out there. Notably, though, Microsoft isn't comparing the Surface Pro 4 against other tablets, with Panay saying that they're just not in the same class. Compared against Apple's MacBook Air, however, the Surface Pro 4 is claimed to be 50 percent faster, while it also has high-end specs that wouldn't be out of place on an ultrabook laptop. Storage goes all the way up to 1TB and you can get 16GB of memory to go with that Intel 6th-gen processor.

See the Surface Book (above) for technical specifications for the Surface Pro 4.

The Surface Pro 4 is available to preorder now, starting at $899. It will be available on October 26th.

New Lumia Phones – the Lumia 950 and Lumia 950 XL combine Windows 10 innovation with our most powerful hardware and top-of-the-line imaging to help you be more productive. And the Lumia 550, our most affordable 4G LTE smartphone running Windows 10.

Panos Panay, Microsoft V.P., formerly in charge of the Surface product line, and now the head of engineering for all premium Microsoft hardware, said on stage.

“We want to put Windows in your pocket. If you haven’t thought about these phones, wake up!”

The Lumia 950 comes with octacore and hexacore processors and liquid cooling technology. The smaller version has a 5.2-inch display, while the bigger cousin features a 5.7-inch display. These are OLED displays with a pixel density of 564 ppi and 518 ppi respectively.

The Lumia 950 and the XL versions run 20-megapixel cameras with a natural flash. Like on the iPhone 6s, both can shoot 4K video and include fifth-generation optical image stabilization technology and a dedicated camera button.

They come with 32GB of internal storage, a microSD card slot and a new USB Type-C connector. Finally, you can charge them up to 50 percent in just 30 minutes.

The two devices will ship in November exclusively through A&T in the U.S. for $549 and $649, with the XL version costing $100 more.

Panay finally hinted at the power of this device. Why would you need liquid cooling for just a phone? Because it’s more than a phone. You can actually plug your Lumia 950 to a dock and use it with your display, mouse and keyboard. It runs a nearly full version of Windows 10.

Called Continuum, the dock has an HDMI, DisplayPort and three USB ports. It looks like a good old USB hub, it’s very tiny and easy to put in your bag. The tile interface in the Start menu copies your phone’s start menu so that you get the exact same apps on your computer and on your phone. Universal apps, such as Mail and Word are scaled up version of the mobile apps.

Microsoft Band 2– the new Band can help you live healthier and achieve more with a new curved screen, a barometer, and apps for email, text, running, biking, the gym, and golf.

This Microsoft Hololens Project X-Ray demonstration at today's NYC event, dramatically illustrates how Hololens can bring the world of holographic games into your living room.

Xbox One– At the Microsoft event this morning, the company’s No. 2, Terry Myerson, announced that the company will be upgrading all of its Xbox One systems to Windows 10. That means the company’s fans will be able to play Xbox 360 games on the Xbox One.

The company is also introducing limited-edition consoles inspired by games. The Halo5 console, Myerson’s favorite, comes with 1 terabyte of storage and will retail for $499. Rumors have been that this will be dropping in November, but Myerson did not give a specific release date.

With the announcement, Microsoft comes one step closer to completing its promise to bring Windows10 to all hardware classes.

Myerson told the breathless (if somewhat groggy) crowd.

“Xbox One is going to bring some serious fun this holiday.”

Microsoft Xbox One Elite Bundle includes the Console with 1TB hard drive and Controller, but does not come bundled with any game software (Click Image To Enlarge)

Microsoft Xbox One comes bundled with a variety of different games at different price points to appeal to both novice gamers on a limited budget and and more advanced players who want more variety and are willing to pay for the privelege.

Xbox One Ultimate Edition (bundled with Gears of War game, the console and controller come in black with a 500GB HD) - $349 (Microsoft Store and Amazon)

Xbox One Ultimate Edition (bundled with Gears of War game, the console and controller come in white with a 500GB HD) - $349 (Walmart)

Xbox One Electronic Arts Sports Bundle (bundled with EA Madden NFL 16 football game and one year free EA Access to play older EA games, the console and controller come in black with a 1TB HD) - $399 (Microsoft Store and Amazon)

Xbox One Electronic Arts Sports Bundle (bundled with EA FIFA 16 soccer game and one year free EA Access to play older EA games, the console and controller come in black with a 1TB HD) - $399 (Microsoft Store and Amazon)

Xbox One Forza Motorsport 6 Bundle (bundled with Forza Motorsport 6 racing game and a promo code for a free Ten Year Anniversary Car Pack, the console and controller come in blue with a 1TB HD) - $399 (Microsoft Store and Amazon)

Xbox One Rise of the Tomb Raider Bundle (bundled with Rise of the Tomb Raider and Tomb Raider: Definitive Edition games, along with a Tactical Survival Kit Content Pack for the new game, the console and controller come in black with 1TB HD) - $499 (Microsoft Store and Best Buy)

Xbox One Holiday Bundle (bundled with three free games: Gears of War: Ultimate Edition, Rara Replay (with 30 older games from Rare made to work on the Xbox One) and Ori and the Blind Forest, the console and controller come in black with 1TB HD) - $399 (Microsoft Store and Amazon)

Xbox One Kinect Bundle (bundled with three free games (Dance Central Spotlight, Kinect Sports Rivals, and Zoo Tycoon) with its latest Kinect bundle, the console and controller come in black with 500GB HD) - $499 (Microsoft Store and Amazon)

Xbox One Elite Bundle - Sold without a free game. The Xbox One Elite Bundle comes with a 1TB hybrid hard drive and controller both in black with a solid state componant that will reportedly load games up to 20% faster. - $499 (Microsoft Store and Amazon)

COMMENTARY: I am very impressed with Microsoft's Windows 10 product unification strategy and new lineup of products running Windows 10. Microsoft gambled that by offering computer users a free upgrade from Windows 7 and 8 to Windows 10, that they could create a huge base of Windows 10 users has proven to be an overwhelming success. 110 million Windows 10 is some kind of a record for a new Windows operating system, and will only rise as diehard Windows 7 and 8 years will eventually upgrade their computer devices to newer devices pre-loaded with Windows 10.

Microsoft's strategy has always been a Windows-based product unification strategy similar to what Apple has done with iOS and OSX and what Google has done with Android. The ability for desktop and mobile devices to be able to "talk" with each other in a seamless fashion is a huge advantage because the interface works similarly on all devices, and makes it easier for Microsoft to sell its customers more goodies loaded with Windows 10. It also keeps customers grounded and loyal to the Microsoft brand and makes it harder for them to switch to Apple or Android.

For Microsoft's Windows-based product unfication strategy to work, you must have great products and ancillary products to support each product line. This time around, Microsoft has an outstanding group of new Windows 10 products. They are incredibly well designed and are truly head and shoulders above those of other competitors, including in my opinion even those of Apple. The Microsoft Surface Book notebook/tablet combination and Surface Pro 4 and Pen will give the Apple Air, Apple Macbook Pro and iPad Pro a run for their money from a design, features, price and performance standpoint.

Microsoft's Windows-based product unification strategy also works well with large enterprise users who depend on the compatability of Microsoft's Office Suite and other productivity software across both desktop and mobile devices. This new product unification strategy makes it least likely that enteprise users will switch to Apple, who has been eyeing enterprise users for some time now. It may even make a few Androids mobile phone users switch to the Lumia line of smartphones, but we shall see.

I recently purchased a new Asus touchscreen notebook, and like it very much, but if I had my druthers, I would've purchased the new Microsoft Surface Book. It is not an Apple-killer, but comes as close as it gets.

I was particularly blown away by the demonstration of Microsoft's Hololens and X-Ray Project hologram games. Google and Apple just filed holographic patents and appear to be moving in the same direction. Facebook's acquisition of Oculus and recent partnership with Samsung to market the Gear VR headset (see my previous blog post) hopes to make virtual reality games affordable and mainstream. With Hololens and X-Ray Project, Microsoft has suddently become a major player in VR.

In conclusion, this is as good as it gets for Microsoft, so I hope that there are no hardware or Windows 10 glitches to screw things up. Kudos for Microsoft CEO Satya Nadella who engineered this Windows 10 product unification strategy. We could be seeing Microsoft's transition from a strictly software-driven company to a hardware and software powerhouse like Apple did under Steve Jobs. Is Satya the next Steve Jobs? He just might be.

10/02/2015

CHROMECAST HAS BEEN REDESIGNED TO FIT YOUR TV, AND YOUR VIEWING HABITS, IN A WAY APPLE TV NEVER WILL.

Today, Google has revealed two new Chromecasts. One is for your TV. One is for your speakers. Both cost $35. And a new app can suck in all of your streaming subscriptions, search them, and get you watching them in seconds.

Google Chromecast for your television (Click Image To Enlarge)

Google Chromecast for your audio speakers (Click Image To Enlarge)

It’s the anti-Apple TV approach. Google’s hardware is cheap, and purposefully forgettable. But more importantly, it uses the apps that are already on your phone to juggle all of the things you want to watch.

New Apple TV and remote (Click Image To Enlarge)

This is Google's big play in TV. Rather than have you download more apps, deal with more logins, and wave a remote at the big screen, Google is countering Apple with what Google does best: connecting your world via invisible Google gunk, to make watching a smarter TV as mindless as ever.

Which approach will prove right?

SO FAR, APPLE'S BUT IT HAD A HUGE HEAD START

If there’s ever been a metric of Google’s sometimes quiet scale, it’s this: In two years, even though your mom has probably never heard of it, Google has sold 20 million of its original Chromecast—a tiny HDMI dongle that connects to your phone and slides into your TV, to stream movies and TV shows.

So Apple TV, once a flop of an experiment, is rapidly gaining momentum. But even though Google’s design traditionally hasn’t been placed on a pedestal alongside Apple’s, it can actually have as great of an impact on the market—and even signal winds of design change. Since launching the Chromecast stick, Amazon and Roku both launched similar minimal media devices. Living rooms, once dominated by set-top boxes, have seen an invasion from discreet, USB-style sticks powered by cellphone guts.

Google Chromecast for TV works with all your apps to you can view their content on your TV (Click Image To Enlarge)

JUGGLING YOUR CONTENT, FROM YOUR PHONE

Chromecast’s biggest update is really its app. Formerly just a portal for your Chromecast settings, it’s now a full-blown media hub on your Android or iOS device.

The app sets itself up by scanning your phone for other apps. If it detects that you have Netflix and HBO Go installed, then the content of those apps will simply be added to Chromecast. You’ll see a queue from each service with their own suggestions of what you should watch.

Most notably, you don’t need to log in to these apps again, nor do you need to tell your Chromecast, via your TV, to download them. Google is juggling the backend of all these services, using your phone as your digital thumbprint, to reduce user friction and keep the experience couch-friendly. So all you have to do is tap the thing you want to watch—and while technically your phone will deep link you over to the Netflix app to play the content, and technically the Chromecast itself is running its own version of the Netflix app that’s already buffered this content to make it play smoothly—to you, it just plays.

All of this seamlessness will be Google's sell for making the phone the hub of its TV experience. Meanwhile, Apple TV with apps will function more or less like another phone, with all-new, separate app downloads and logins. And while developers salivate over the idea of Apple TV showing a path to true interactive content, there's no reason Chromecast couldn't do the same through a phone.

Google product manager Micah Collins explains.

"The real estate from this point forward is the Chromecast app in a device in your hand. That’s the strategic opportunity that I think is giving us reason to go down this path."

Google Chromecast for TV is a wire not a dongle stick (Click Image To Enlarge)

A WIRE, NOT A DONGLE OR A TROPHY

In terms of its industrial design, the new Chromecast is, notably, no longer a stick. It’s a Beats headphone-like puck that hangs, like one long wire, off the back of your TV or near your speaker. Why a puck? Michael Sundermeyer, hardware design lead on the project, calls it "uniquely Google," a visual play off the Chrome logo that can be more of an icon than a glorified USB stick could have been.

Functionally, the round shape allows the Chromecast to fit several antennas with different orientations to capture floating radio waves with dependability. "Having multiple antennas with different orientations and purposes is a way you make Wi-Fi reception reliable," Sundermeyer explains. For the Chromecast Audio, the puck features a 3.5mm jack, RCA, and optical jack for plugging into any speaker you like to stream services like Spotify, Pandora, and Google Play Music.

For the video version of Chromecast, which streams HD (not 4K) content, Google designed what it believes is the thinnest magnetically shielded HDMI cable in the world to connect from the puck into the TV, even within the tiniest gaps of a wall-mounted set.

Sundermeyer explains.

"It was a lot harder than any of us believed. HDMI cables tend to be really thick, rough things. They barely bend at all. We wanted something that just the weight of the puck would make it drape a certain way . . . [and it] had to fit with the design, strong enough to withstand shoulders of twists and bends."

To get the mix of shielding and flexibility, Google enlisted its own mechanical engineers, electrical engineers, and designers, who spent months sandwiching materials like kevlar and molded plastics until they got the cord just right. And, if you really think about it, maybe it’s not so crazy that Google spent so much time on the wire. Because when you actually install the Chromecast, it dangles from the back of your TV, hidden in the shadows of wiring, rather than featured like a sleek trophy of capitalism on your media shelf.

The Chromecast is, in essence, a wire, a symbolic product that’s almost mocking Apple’s prominence on your shelf, while reinforcing the idea that Google’s value—and what really matters—is really the information piping through the line.

STRATEGIC OPPORTUNITY

When you consider that the Chromecast is really just your cellphone identity playing out on your television, it’s easy to see what Collins meant by the "strategic opportunity" at play: The cellphone could scale Chromecast to handle other services in your home. Apple TV isn’t just an entertainment device, after all. It’s Apple’s trojan horse for Homekit and the greater Internet of Things hub in your home. (Notably, Microsoft had the exact same play planned for your Xbox One, though it will probably never come to fruition at this point since the Xbox has been repositioned as a gaming machine to tackle the PS4.)

It seems that the Nest thermostat will be Google’s Internet of Things hub. But when you think about just how challenging it will be to control a whole home of lightbulbs with a remote aimed at a 50-inch screen, the solution seems simple: This would work so much better on a multitouch screen that’s always in your pocket, but could be easily extended to any shared screen in your home.

I use the original Chromecast for TV and just love it, but I use it mostly to watch YouTube videos. Love the fact that the new Chromecast for TV automatically recognizes any apps you may have installed on your mobile device (phone and tablets) and seamlessly allows you to interact with each app without having to "boot" them separately like you need to do the older Chromecast for TV. This is a nice feature which Apple TV also incorporates, but Apple requires you to hook it up to your regular TV and use the remote control. With Chromecast TV you are completely mobile and can take Chromecast TV on the road and hook it up to any TV that has an HDMI port. Your mobile device is your remote control. I have two HDMI ports on my Vizio, and my old Chromecast TV works great, albeit a bit slow at times. The newer Chromecast for TV's WIFI performance is supposed to be significantly better and faster, eliminating the latency caused by the buffering of the older version and the result is much better video and audio performance. Can hardly wait to upgrade, and at $35.00 it makes this so much easier.

Here's the video of Google's unveiling of the new Chromecast for TV on September 29.

BREAKING: AMAZON BANS SELLING CHROMECAST AND APPLE TV

Effective September 30, 2015, Amazon announced that it will stop selling media-streaming devices from Google Inc. and Apple Inc. that aren’t easily compatible with its video service, the latest example of the company using its clout to promote products that fit with its own retailing strategy.

The Seattle-based Web retailer sent an e-mail to its marketplace sellers that it will stop selling the Apple TV and Google’s Chromecast since those devices don’t "interact well" with Prime Video. No new listings for the products will be allowed and posting of existing inventory will be removed Oct. 29, Amazon said. Prime Video doesn’t run easily on its rival’s hardware.

Roku Inc.’s set-top device, Microsoft Corp.’s Xbox and Sony Corp.’s PlayStation, which work with Amazon’s video service, aren’t affected, it said. Amazon’s Fire TV stick, which plugs into an HDMI port to connect televisions with streaming services such as Netflix and Prime Video, is the company’s best-selling electronic device.

Courtesy of an article dated September 29, 2015 appearing in Fast Company Design and an article dated September 29, 2015 appearing in Engadget and an article dated October 1, 2015 appearing in Bloomberg

07/27/2015

Nearly all time spent with digital radio, Pandora takes place on mobile

Music listeners are a mobile bunch, based on recent research by Triton Digital. The firm, which provides digital services to traditional and online radio companies, monitored clients’ weekday streaming activity from 6am to 8pm through the month of May 2015 and found that mobile accounted for 75.8% of US digital audio listening during the analysis, vs. a 24.2% share for desktop.

Click Image To Enlarge

Triton conducts this analysis on a monthly basis, and past figures indicate that mobile isn’t stopping expansion any time soon. For example, in January 2015, it accounted for 72.4% of digital audio listening, vs. 27.6% for desktop.

eMarketer expects US adults to spend an average of 43 minutes daily with digital radio in 2015, or 11.9% of total digital time each day, and nearly all of that will be on mobile (38 minutes). Leading digital radio servicePandora will account for 27 minutes of daily radio time, or 7.5% of total time spent with digital, with mobile taking in 23 minutes.

Other research points to Pandora’s huge mobile presence. When February 2015 polling by Triton Digital and Edison Research asked US smartphone owners which digital radio apps they had downloaded, Pandora led by a long shot, at 50% of respondents.

Pandora also shines among mobile apps as a whole. According to May 2015 research by comScore, Pandora was the seventh most popular smartphone app among US smartphone app users, with a 44.0% reach. And March 2015 research by Sandvine Incorporated found that Pandora accounted for 3.33% of downstream mobile internet traffic in North America during the peak period (when bandwidth utilization is heaviest).

Click Image To Enlarge

Advertisers on Pandora are following the earbuds. eMarketer estimates from March 2015 forecast that Pandora net mobile ad revenues worldwide would total $752.0 million this year—up 31.7% and representing nearly 80% of the services’ total ad revenues. Most of that spending will come from the US, where Pandora mobile ad revenues will total $737.0 million.

Pandora recently reported second quarter 2015 revenues of $285.6 million, a 30% year-over-year increase. Advertising revenue was $230.9 million, a 30% year-over-year increase. Subscription and other revenue was $54.6 million, a 31% year-over-year increase. Total revenues for the trailing 12-month period exceeded $1 billion. Revenue is expected to be in the range of $1.175 billion to $1.185 billion for the year ending 2015. If the latter guidance total holds, Pandora will represent nearly one-third of total forecasted internet radio ad revenues for the year 2015.

COMMENTARY: In January 2015, XAPP Media prepared "The Internet Radio Trends Report," showing how popular internet radio has become among users and its importance as an interest ad medium. Here are a few exerpts from that report.

User Growth: Up and to the Right

The first consideration for advertisers or anyone assessing the industry will no doubt be audience size. eMarketer reported in 2014 that U.S. monthly digital radio listeners had grown to 160 million. That is over 50% of all U.S. citizens and 63% of Internet users. The audience is expected to grow to 183 million by 2018, significantly outpacing population growth. Nielsen reported in January 2015 that 67% of all music listeners access streaming services in a typical week.

The conclusion for marketers is simple. Internet radio now reaches a large audience and can be an important channel for reaching consumers. However, the story doesn’t end here.

Time Spent Listening Growth

The more important trend may be the growth in time spent listening. Consumer audio listening habits are changing. On a per-user basis of weekly listeners, the growth has been impressive. Edison Research’s 2014 Infinite Dial report showed that listening time more than doubled over the past five years, exhibiting a 13.5% compound annual growth rate.

Click Image To Enlarge

eMarketer also reported Accustream data that illustrates how user growth and time spent listening have dramatically increased the number of listening hours on Internet radio. Between 2009 and 2014, the data show that listening hours on Shoutcast, Napster, Rhapsody and Pandora have grown from 0.86 billion monthly listening hours to 4.22 billion in 2014 – a five-fold increase. This growth is impressive and only represents a portion of the Internet radio listening market. Accustream also forecasts listening hour growth rates to range from 20-30% over the next two years. Nielsen data reported in January 2015 showed an even faster growth rate of 60.5% for audio streams in 2014. Nielsen’s conclusion: “streaming music is surging.”

More Listening, More Ad Exposure

If we consider data from Edison Research’s 2014 Share of Ear study we can estimate that Internet radio listening now averages about 14 hours and 12 minutes per month across the listening population. Listening hours are critical. They represent opportunities to reach real people with advertising messages.

Click Image To Enlarge

A review of four leading Internet radio pure plays in November 2014 revealed an average of 2.68 minutes of ads per hour. At 14:12 hours of listening per month, that reflects about 38 minutes of ads. Recent analysis shows the average Internet radio spot length is 25.88 seconds, which translates into about 88 ad impressions per month, per listener.

Revenue Growth

Not surprisingly, growth of industry revenue has accompanied the rise in audience size and listening hours. There are two sources of revenue that most Internet Radio streamers draw from: subscriptions and advertising. There is no public information on subscriber revenue other than Pandora and some estimates on Spotify’s model. However, there is now attention focused on advertising revenue.

Click Image To Enlarge

An analysis by BIA/Kelsey suggests the 2014 U.S. ad revenue of $2.09 billion will grow to $4.01 billion by 2017. That is a compound annual growth rate exceeding 24%. BIA/Kelsey and eMarketer estimate that Internet radio ad revenue will grow from about 11.7% to 20% of overall radio industry revenue during the period. Additionally, SNL Kagan reports that music represents nearly 20% of all mobile entertainment revenue.

06/22/2015

APPLE IS SKILLED at attracting praise. Often, the tech giant deserves that praise. This is not one of those times.

On Sunday, high-ranking Apple exec Eddy Cue tweeted that the company would, in fact, pay royalties to musicians during the three-month free trial period of its new music platform Apple Music.

This decision was a reversal of an earlier policy that became the center of controversy this weekend when megastar Taylor Swift wrote a blog post slamming Apple for its plan not to pay artists while Apple Music was in its trial phase. Sift said.

“It is unfair to ask anyone to work for nothing,”

She added that she would be withholding her most recent album, 1989—that of “Shake It Off” fame—from Apple Music.

Last week, BuzzFeed reported that Swift had pulled her wildly popular "1989" album from Apple Music because of the streaming service's decision not to pay royalties during its three-month trial period. That followed her decision last year to remove "1989" from Spotify because she didn't think the company gave enough money to artists.

Click Image To Download

Apple has always positioned itself as a company that stands by musicians. So Apple changed its policy. Cue wrote on Twitter.

Swift responded saying she was “elated and relieved,” and Apple came out looking like the good guy in a crowded industry in which artists and the tech companies that profit from them are often butting heads.

“We never looked at it as not paying them. We had originally negotiated these deals based on paying them a higher royalty rate on an ongoing basis to compensate for this brief time. But when I woke up this morning (Sunday, June 21) and saw what Taylor had written, it really solidified that we needed to make a change.”

And yet, the only change Apple is making is paying artists what they should have been paid all along. If Apple were really so pro-artist, would it have instituted a policy that withheld royalties from artists in the first place? It doesn’t seem surprising that artists would balk at the prospect of not getting paid. But Apple’s roots in the music industry run deep—all the way back to the birth of the iPod. It seems reasonable to believe that Apple thought it could get away with not paying because it didn’t think anyone would be bold enough to speak out against a company that is already such a force in music. And if anyone did protest—props to you, T Swift—the decision would be easy enough to reverse—and might even score Apple Music some good press.

Jeff Rabhan, an artist manager and chair of the Clive Davis Institute of Recorded Music at New York University, says.

“They only did the right thing because they got caught,”

A Band-Aid on an Open Wound

Apple has always positioned itself as a company that stands by musicians. With iTunes, it saved the industry from the Napster era of pirated music and has helped artists actually sell music even as streaming services threatened to shrink artists’ income. So while Rabhan applauds Apple’s decision to pay artists their fair share, he calls the original plan “a slap in the face” to musicians who have bought into Apple’s promise. Rabhan says.

“I think Apple felt that they could get away with it because they’re Apple. They felt the artists would just go along with it.”

Had Apple planned to do the right thing all along—that is, paid artists for their music—there wouldn’t have been a story. But its apparent change of heart has garnered big headlines—and more publicity for Apple Music. The company even got a full-throated endorsement from Taylor Swift out of it. That’s worth every penny of the millions of dollars Apple will now pay artists as a result of this change—millions, let’s not forget, that Apple can well afford.

'It’s the model that doesn't work.' - JEFF RABHAN

Meanwhile, smaller rivals like Spotify have been vilified by artists, including Swift, who pulled her music from Spotify in November 2014, arguing that artists deserved to make more from the platform.

Rather than bowing to Ms. Swift, Spotify CEO Daniel Ek wrote a blog post defending its royalty agreements, claiming that the company has paid $2 billion to labels, publishers, and music owners. That stance turned Spotify into the poster child for the ongoing battle between artists and streaming services, a reputation Rabhan says is not altogether warranted.

Rabhan says.

“They’ve (Spotify) become the beacon of the negativity surrounding streaming, but they haven’t specifically done anything wrong. It’s the model that doesn’t work.”

Spotify is still a young company, he argues, struggling to make a profit, and it pays about 70 percent of revenue to music rights holders. That’s not much different than the 71.5 percent Apple is paying. The only difference is Spotify’s future might actually depend on those margins. Apple’s does not.

For Apple to prove it truly stands with artists, Rabhan says, it would have to fundamentally change the way these contracts are negotiated, striking deals directly with the artists instead of music labels. Until that happens, he argues, Apple has done little more than “put a Band-Aid on an open wound” that cuts across the industry.

If anyone deserves the credit, Rabhan says, it’s Swift, who he says has emerged as the most unlikely advocate for artists’ rights. She’s not a crusty old-timer or an unknown artist with a lot to lose. She’s the most relevant star of our day, the person who needs the money least, but is using that power to stand up for emerging artists. Rabhan says.

“I would have never expected it to be her, but Taylor Swift is the voice of artists right now in a sea of silence.”

She reiterated opinions she voiced in a Wall Street Journal op-edin July, saying that artists should value their art and make sure that people are paying enough money for it.

Swift also notes that Spotify could hurt music sales. Music is available for streaming on Spotify even to those who don't pay for a premium subscription (those users are shown ads).

Swift told Time.

"[People] can still listen to my music if they get it on iTunes. I’m always up for trying something. And I tried it and I didn’t like the way it felt. I think there should be an inherent value placed on art. I didn't see that happening, perception-wise, when I put my music on Spotify. Everybody's complaining about how music sales are shrinking, but nobody's changing the way they're doing things. They keep running towards streaming, which is, for the most part, what has been shrinking the numbers of paid album sales. With Beats Music and Rhapsody you have to pay for a premium package in order to access my albums. And that places a perception of value on what I've created. On Spotify, they don't have any settings, or any kind of qualifications for who gets what music. I think that people should feel that there is a value to what musicians have created, and that's that. I wrote about this in July, I wrote an op-ed piece in the Wall Street Journal. This shouldn’t be news right now. It should have been news in July when I went out and stood up and said I'm against it. And so this is really kind of an old story."

Artists generally don't make nearly as much money putting their music on Spotify as they do selling digital albums and songs on services like iTunes.

Spotify says it pays 70% of its revenue to labels — which will amount to about $1 billion this year — but some artists feel they don't get a big enough cut. The streaming service revealed last year that it paid record labels an average of less than a penny per play, and that's just the money going to labels, not the artists.

But it's unclear how much of that money was seen by Swift. Spotify paid the $2 million to Universal, which holds the rights to Swift's music, and then her label Big Machine got a cut.

CONCLUSION: KUDOS to Taylor Swift for becoming an unlikely lightning rod for music artists everywhere. She has become the "Joan of Arc" for all music artists by standng up to Apple. Score: Swift 1, Apple 0. Spotify needs to get its act together and change its royalty policy as well.

Whether the music labels will allow individual artists to negotiate royalty deals directly with Apple, Spotify and other online music platforms could be difficult to do since they incur a lot of costs to get an album produced, promotied and distributed. I am sure they will not give up their legal rights to the artist. Will this force artists to develop their own music production and distribution companies? That remains to be seen.

Courtesy of an article dated June 22, 2015 appearing in Wiredand an article dated November 13, 2014 appearing in Business Insider

06/16/2015

Oculus today gave the world the first look at its Rift consumer virtual reality headset which will ship with a wireless Xbox One controller. It also comes with a small, table-top camera on a stand that watches a constellation of LED markers on the Rift to track your head movement.

The partnership with Microsoft will also see the Rift work “natively” with Windows 10, plus play Xbox One games in the headset.

Oculus VR's new consumer Rift VR headset will be on display at the E3 2015 Electronic Entertainment Expo running between June 16-18 at the Los Angeles Convention Center in Los Angeles. People attending the E3 Expo will be able to try out Oculus Rift.

Oculus also made the announcement in its blog:

Step into the Rift

Today, we’re thrilled to introduce you to the Oculus Rift!

The Rift delivers on the promise of consumer virtual reality and next-generation VR gaming.

The consumer Rift virtual reality headset up close (Click Image To Enlarge)

Custom Display and Tracking System

The Rift uses custom display and optics technology designed specifically for VR featuring two AMOLED displays with low-persistence. The technology enables incredible visual clarity as you explore virtual worlds with the Rift.

The consumer Rift virtual reality headset is tracked by a Infra-Red LED constellation tracking system for precise, low latency 360-degree orientation and position tracking (Click Image To Enlarge)

The headset is tracked by our IR LED constellation tracking system for precise, low latency 360-degree orientation and position tracking.

Integrated VR Audio

Audio is a critical component to achieving and amplifying presence.

The consumer Rift features an integrated VR audio system with adjustable headphones (Click Image To Enlarge)

The Rift features an integrated VR audio system designed to convince your ears that you’re truly there. The integrated headphones are also removable in case you want to use your own.

It also incorporates a high quality internal microphone for social experiences.

Ergonomics and Design

We’re incredibly excited for you to try the Rift’s new design — we’ve been refining it over the last few years.

The Rift has an advanced ergonomic design improves the headset’s overall balance and stability. This strap architecture offloads the overall weight, allowing the Rift to rest comfortably.

It’s as easy to put as slipping on a baseball cap. Once you’re in, simply adjust the straps to fit you.

The consumer Rift virtual reality headset includes a mechanism that allows you to adjust the distance between the lenses for the most comfortable visual experience (Click Image To Enlarge)

Further, we’ve included a mechanism that allows you to adjust the distance between the lenses for the most comfortable visual experience. You can also remove the facial interface to replace the soft foam, and we’ve improved the form factor to better accommodate glasses.

Wireless Xbox One Controller included with every Rift

We’ve been working closely with developers to understand what they need from the Rift since the earliest days at Oculus.

Developers wanted an input device that was robust and versatile enough to enable next-generation games and experiences in this first generation of VR. As a result of that collaboration, we’ve decided to incorporate one of the best gamepads available, a wireless Xbox One controller, with every Rift.

The consumer Rift virtual reality headset incorporates one of the best gamepads available, a wireless Xbox One controller, with every Rift (Click Image To Enlarge)

…but what about new genres and categories of games that require a different set of inputs?

Introducing Oculus Touch

We see VR input evolving and coming in different forms depending on the experience you want to have in virtual reality.

While the Xbox controller is great for many games and genres, we want an input device that lets you to reach out and interact with objects in VR naturally.

We’re excited to introduce Oculus Touch!

The Oculus Touch prototype is a pair of tracked controllers called 'Half Moon" that deliver hand presence – the sensation of feeling as though your virtual hands are actually your own (Click Image To Enlarge)

Oculus Touch is a pair of tracked controllers that deliver hand presence – the sensation of feeling as though your virtual hands are actually your own. Touch will let people take their virtual reality experiences further than ever before by unlocking new interactions.

Today, we’re showing off a feature prototype for Oculus Touch at E3 called ‘Half Moon’. There are two controllers, one for each hand. They’re mirror images of each other, like your own hands.

Each Half Moon controller has a traditional analog thumbstick, two buttons, and an analog trigger. There’s also an input mechanism that we call the ‘hand trigger’. Imagine using this trigger to pick up a virtual gun, then using your index finger to fire it.

Each Oculus Touch VR sensor is held in each hand and delivers the sensation of feeling as though your virtual hands are actually your own (Click Image To Enlarge)

They’re wireless so that you can move and interact with the virtual world freely, and they use the same IR LED constellation tracking system we use in the Rift for precise, low-latency, 6-DOF tracking.

The Half Moon prototype includes haptics that developers can use to deliver feedback when interacting with objects in the virtual world.

Finally, Half Moon can detect a set of finger poses using a matrix of sensors mounted throughout the device, which allows the controller to recognize a set of communicative hand poses like pointing, waving, and giving a thumbs-up.

Close-up view of the Oculus Touch showing touch controls located on top for the thumb and belowthe ring for the index finger (Click Image To Enlarge)

Oculus Touch will ship to gamers, developers, and enthusiasts in the first half of 2016, and will be available for pre-order around the same time as the Rift.

Gaming in the Rift

At today’s event, we showcased a few of the upcoming made-for-VR games for the Rift including EVE: Valkyrie from CCP Games, Chronos from Gunfire Games and Edge of Nowhere from Insomniac Games.

All of these games will be playable on the Rift at E3, along with new VR demos including:

Damaged Core by High Voltage

VR Sports: Challenge by Sanzaru

Esper from Coatsink

AirMech by Carbon

Lucky’s Tale from Playful

We’ll have more details on all of these games next week at E3. If you’re at the show, come by the booth and experience them for yourself on the consumer Rift. You can also schedule a demo for the Rift using our Oculus Live app.

Stay tuned for more made-for-VR game announcements as we head toward the launch!

$10,000,000 to accelerate Independent Developers

We know that virtual reality is going to inspire a new generation of game developers, driven by emerging independent teams and individuals.

In order to bring these innovative, one-of-kind independent games to the Rift, we announced today that we will be investing more than $10,000,000 in accelerating and supporting them.

Not only will these folks bring more and better games for launch and beyond, but we’re looking forward to their inventiveness and creativity in VR.

The Future of VR Gaming

Virtual reality is going to transform gaming forever. Thank you for being a part of this journey with us.

Gamer using the consumer Oculus Rift headset and Oculus Touch sensors to play an Xbox game (Click Image To Enlarge)

COMMENTARY: It's been just a little over a year since I informed my blog fans about Facebook's acquisition of Oculus VR back on March 25, 2014 and the inside story about how Facebook's Mark Zuckerberg met with the founders of Oculus and convinced them to join Facebook on June 27, 2014. At that time, I thought it would take two or three years before Oculus VR would have a commercially viable product that would be ready for consumer marketplace. The problem was developing VR games for Rift. Well, the miracle has happened. Not only do they have a consumer version of the Rift headset but also Oculus Touch a pair of hand sensors to play around in the virtual world, a partnership with Microsoft that will include an XBox controller and half a dozen VR games available for Oculus customers.

The projected price for the Oculus Rift headset and Touch sensors will be $1,500.00. This puts it out of the range of most gamers, but early adopters will have no problem coming up with the doe. I haven't read any reviews of the new consumer Oculus Rift headset, but as soon as these these are available, will be bring to you here on my blog.

06/12/2015

Apple has finally jumped into the music streaming race, unveiling Apple Music at WWDC this afternoon. The company revolutionized digital music with the iPod and iTunes, but is now playing catch up, trying to align itself with the current era of subscription offerings. Apple CEO Tim Cook saud,

"We’ve had a long relationship with music. And music has had a rich history of change, some of which we’ve played a part in."

The service will bring music downloads, streaming radio, and a streaming music service into a single app. Like most digital services, it promises to learn your tastes and recommend great new songs accordingly.

The service will cost $9.99 a month, or $14.99 for a family plan of up to six individuals, with a three-month free trial. In order to use the family plan, you'll need to have iCloud Family Sharing active. By contrast, Spotify offers a two-person subscription package for $14.99. Apple says its new music service will be available June 30th, with Android coming in the fall. Apple had hoped to shake things up by offering a tier priced between $5 and $8, but unfortunately couldn’t get the music industry on board. The end result is a product that has little to differentiate it from what is already in the market in terms of price and selection. The 30 million tracks on Apple Music are also going to be found on Spotify or Rdio. Apple is hoping features and exclusive content will be enough.

What Apple Offers With and Without Paid Membership (Click Image To Enlarge)

Paid Apple Music users will be able to download albums and playlists to play offline, while free users will only be able to listen to Apple Music radio stations with limited skipping. The company has rebuilt iTunes Radio and reportedly staffed it with big-name artists like Dr. Dre, will.i.am, Pharrell, and Drake acting as DJs. It is also bringing on experienced talent like BBC’s Zane Lowe to help curate stations. Jimmy Iovine, who has been heading up Apple’s renewed push into music, reportedly tried to sign other big names like Kanye West and Beyoncé to exclusive deals, but lost out to Tidal, a rival service recently launched by Jay Z and a consortium of high-profile musicians.

The first station is called BeatsOne and will be available in 100 countries. It's going to be playing tunes around the clock and will be anchored by three DJs: Zane Lowe, Ebro Darden, and Julie Adenuga. Subscribers can skip as many tracks as they like. Apple's Eddie Cue says,

"The music it recommends to you isn't just algorithms, it's recommendations made by our team of experts."

Apple Music provides regular streaming, music radio stations with DJ's and Connect, a social network for music artists, which gives you direct insights of what artists are doing right now (Click Image To Enlarge)

This is pretty much the same pitch that Beats made when it launched. Users who signed up for that service will find their accounts transferred automatically to Apple Music when the latter launches on June 30th.

Apple also showed off a feature called Connect that lets artists upload music, photos, and messages which are shared with their fans. It's basically a blog fans can subscribe to, then comment and like individual posts. This is similar to the exclusive behind-the-scenes material that Tidal has been sharing from its cadre of artists.

Drake came onstage to show off Connect. He said as a child he wondered if he or anyone from Canada could make it big in the world of rap. Luckily technology was there to help.

"The dream of being a new artist like myself five years ago and connecting directly with an audience has never been more close or reachable."

There is some cool Siri integration. You can ask it to play a particular artist or track. You can also give it a more general query, like "play the top track from the summer of 1982," or whatever year you happened to have graduated from high school. But Apple says you don't need your iPhone present — you'll be able to sync songs to your Apple Watch without it.

The big question is whether Apple needs to differentiate to succeed. It is entering a market dominated by Spotify, which has racked up over 60 million users, with 20 million paid subscribers. Spotify has had the run of the land since it came to the US from Europe in 2011, but with over 800 million credit cards on file, Apple has a chance to quickly assemble a large user base and give Spotify its first true challenger. If it can get people who purchase a new Apple device to sign up for a free trial, it may end up bringing a large number of new users into the streaming music market that up until this point were not convinced to give a paid service a try.

COMMENTARY: Apple's announcement of Apple Music and integration with SIRI, the iOS personal assistant, is probably sending shockwaves throughout the music streaming landscape, particularly with industry leaders Spotify and Pandora. Daniel Ek, CEO of Spotify, one of the leaders in the music streaming space, reacted to the Apple Music announcement with a flippant tweet: "Oh, OK" The smug reaction by Spotify's CEO comes after his company closed a $526 million funding round. Ek can afford to react smugly given that Apple Beat, the predecessor to Apple Music, really wasn't much competition (See below). However, that smugness may be shortlived.

Spotify began this latest funding round in early April, and was originally seeking $400 million to reach a valuation worth double that of competitor Pandora. The successful round means that Spotify has now pulled in more than $1 billion from investors, but even with that influx of money and 20 million paying subscribers, Spotify's future is not entirely secure. The company's business model means it still operates at a loss — the Swedish firm has to pay almost 70 percent of its revenue to label owners and musicians for rights and royalties.

The half-billion dollars taken during during this funding round show that the business world still believes in Spotify, but it will need to either renegotiate how it pays labels, or start convincing more of its 60 million users to part with their money if it wants to stay on top in an increasingly crowded marketplace. The company is already attempting to diversify by adding videos and podcasts but its competition is growing too. Established competitors such as Rdio and Pandora are still fighting for users, while new entrants backed by big names, such as Jay Z's Tidal, enter the fray.

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For all its fanfare, Apple Music is not fundamentally all that much different from what Spotify has been doing for the past nine years. Casey Rae, the CEO of the Future of Music Coalition, says.

“If Apple is serious about 100 million subscribers, the product will need to be an awful lot more compelling than what is already on the market.”

The Apple Music announcement is good news for Spotify too—millions of people are paying for its service. And millions more are using its free, ad-supported option, an alternative that Apple doesn’t appear to be offering. Even if those 20 million paid subscribers ditch the Swedish service, Spotify will still have millions of fans—and the revenue that comes from advertising to them.

Longtime music analyst Bob Lefsetz in a blog postsays Apple is not going to be a Spotify killer.

“Turns out to win, or at least play the game in a meaningful way, you’ve got to have a freemium offering. And Apple Music does not. Those already desirous of paying for streaming already do, and getting someone to switch is difficult.”

So, yeah, Spotify is unimpressed, and it wants you to know that. On Monday, after Apple announced Music, the company’s CEO Daniel Ek tweeted, “Oh ok,”according to reports, though the tweet has since been taken down.

What Apple has going for it are its well over 200 million (as of November 2014) paying iTunes users. The big question now is: How many of these loyal iTunes users will convert into music streamers? Apple iTunes users were buying/renting single songs or albums, not streaming tunes like users at Spotify or Pandora. If iTunes users convert into music streamers, will they be willing to pay for that service? It is quite possible that they are already getting their music streams from Spotify or Pandora, so it gets interesting trying to predict whether they will dump Spotify or Pandora, and move to Apple Music to get their daily music streaming fix.

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Unlike Apple Music, Spotify and Pandora have been offering FREE music streaming (albeit it with some limitations). I have never known Apple to offer FREE anything, except for apps (which are usually crammed with ads). Will Apple offer freemium music streaming like Spotify and Pandora? I have a feeling that they might be forced to do just that, in order to pull away users from Spotify and Pandora. This maybe in a limited form like "Three Free Months" or "Buy One Music Album, Get 10 Free Music Streams."

However this all turns out, we should know rather quickly, perhaps within 3 to 6 months, whether Apple Music will become a "Spotify or Pandora Killer." Stay tuned for more on this topic.

Courtesy of an article dated June 8, 2015 appearing in The Verge, an article dated June 2, 2015 appearing in Digital Music News, an article dated June 8, 2015 appearing in The Verge, an article dated June 8, 2015 appearing in Gizmodo, an article dated June 10, 2015 appearing in The Verge, an article dated June 10, 2015 appearing in Wired

06/07/2015

In March, a review titled “Top-Tier Sound For Pennies” appeared on the well-respected web forum head-fi.org. The author, a headphone aficionado who goes by the handle AndroidVageta (AV), gave five stars to some Chi-Fi earbuds that cost less than a food truck lunch. He compared the dynamic range and clarity of these cut-rate buds to theJH16 Pro, a set of in-ears (with eight driver per ear) that retails for $1,149.

A pair of JH Audio 16 Pro in-ear headphones like these cost $1,149 and are the earphones of choice by celebrities like Lady Gaga and Justin Timberlake (Click Image To Enlarge)

Incidentally, the JH16 is the same model that The Absolute Sound praised as “the sonic ‘mountaintop’ among in-ear headphones.”

“For the $12 I spend shipped (sic) for these Baldoor E100’s all I can say is that they are simply amazing. Not simply amazingfor the price, mind you, but amazing compared to anything(AV’s emphasis) I’ve ever heard or have owned.”

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Disposable buds that sound as good as the outrageously expensive IEMs that Justin Timberlake and Lady Gaga wear onstage? To quote Vincent Vega in Pulp Fiction: “That’s a bold statement.”

Despite all the hype rhetoric, AV’s “PSA” barely registered on the audio Richter scale: 6 measly comments, ranging from appreciation (“Nice review man!”) to agreement (“I really am massively impressed.”) to disbelief (“No way.”). The E100 EarBell, a throwback style bud distributed by a Chinese company called Mrice, was destined for hi-fi obscurity. Just another cheap gadget tossed on the Chi-Fi scrapheap.

A few days later, though, AV’s Head-Fi review surfaced on Reddit, where it generated 230 responses from frugal readers in search of a bargain. As interest ramped up, Reddditors noticed that these el cheapo IEMs were becoming a scarce online commodity. Wrote AV in the long and laughably inane comment thread:

“They’ve apparently sold out everywhere else.”

AV coyly taking credit for the sudden popularity of an earphone that most audiophiles had never heard of until now.

“Maybe I shouldn’t have been so vocal about them as now it’ll be hard for me to get a second pair!”

Just like that, the E100 cult was born.

Hold the Tragus

There was one slight caveat to this deal of the century. For optimum audio performance, these magic buds had to be positioned within the ear—no joke—sideways. This precarious orientation was hardly ideal, especially if the listening sessions involved any head movements. To address this problem, a crude fix was suggested by fellow Redditor robertmeta:

“I was able to use tape to keep them in without horrible discomfort.”

Stuffing buds in the ear sideways and securing them in place with tape was certainly unorthodox (not to mention bizarre, uncomfortable, and highly impractical), but the sound was supposedly godlike. AV gleefully observed.

“It should be noted that wearing [the E100s] like this greatly enhances the bass but surprisingly leaves the rest of the sound unaffected. Lessens sound stage a bit but it already has plenty to spare.”

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Many were confused by what one Redditor referred to as the “weird fit.” To illustrate the exact alignment of the buds within the ear, AV snapped a profile selfie. This made all the difference. After initially berating the E100s (“…these are $15 earbuds, and they sound like $15 earbuds.”), Mad_Economist had a sonic Epiphany. Of course, being a degenerate audiophile, he had to add his own outlandish tweak to the proceedings.

“…holding the tragus, anti-tragus, and leg of helix ‘shut’ around the bud while pressing the bud inward at a slight angle consistently produces a sound much closer to what OP is describing: very warm, with a fairly large soundstage and a surprising amount of bass impact.”

For those who didn’t read ENT journals for kicks, a link to a medical photo was posted so that every Redditor could distinguish their tragus from their ear hole (auditory meatus).

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Audiophiles Aren’t Crazy

If an audiophile raves about a $12 bud and says that if you stick it in your ear sideways it will sound better than a professional IEM that costs over a thousand dollars, and if another audiophile agrees and claims that it will sound even better if you pinch your ears together at three precise points simultaneously, while applying pressure to the bud at a “slight angle,” proceed with caution.

The natural inclination is to dismiss the entire Reddit/E100 psychodrama as sheer lunacy and not proceed at all, but that would be a mistake. AV, robertmeta and Mad_Economist are audiophiles, not schizophrenics. They may be eccentric, but they are first and foremost critical listeners. Cut through the babble and one thing is certain: These guys know a sweet bud when they hear it.

Given these circumstances, it’s completely reasonable to suspect that the crazy Redditors might actually be onto something. Maybe the E100 really is a hidden gem buried deep in the vast Chi-Fi industrial complex. And—even more importantly—maybe there’s a different earphone model in the Mrice line with a similar (if not identical) sound signature that doesn’t require mastering the sideways “weird fit,” memorizing diagrams from Gray’s Anatomy, taping the tragus, or pinching one’s ears like the village idiot.

Plan B

It turns out there is a sane alternative to the E100. Scroll down Amazon’s “Mrice” offerings, and there it is, halfway down the page: the GranVela E300. This generic looking in-ear phone doesn’t require users to violate the laws of ergonomics or twist their ear cartilage into a knot in order to summon the intoxicating Mrice house sound. For $14.93 (or $17.30 for model with an inline mic/remote) the E300 “Capsule” is literally plug-and-play. Hardcore audiophiles may be wondering: Has the magnificent E100 SQ been sacrificed in the pursuit of such trivial considerations as comfort, dignity and social acceptability? Negative. AV’s 5-star review of the Mrice E300s describes exactly how the Mrice E100s sound: "Awsome." Now, kneel at the altar of the mighty and benevolent Chi-Fi gods.

Baldoor, a Chinese competitor of Chintek, has produced a clone of the E300 called the GranVela MRice E300. They sell for $19.90 on Amazon.com (Click Image To Enlarge)

Clone Wars

The design of the Mrice E300 and the Chintek E300 are so similar, it’s impossible to tell them apart. The only difference is that the Chintek E300 has fancier packaging and costs about $10 more. Helen Chintek wasn’t even aware that the Mrice E300 existed until I pointed it out to her. The fact that a competitor had not only copied one of her company’s industrial designs but also its name (Baldoor) and model number didn’t seem to faze her.

“In China, there are thousands of earphone factories. Some good quality, some bad quality.”

She was confident that the Mrice E300 was an inferior copy of her original Chintek E300.

“To copy our outside design is very easy, but the inside technical and sound quality of the earphone will not reach our standard.”

She later backtracked, however, and admitted that it was possible the two models were identical inside and out. It’s not unusual for “ghost shift” employees at Chinese factories to churn out an extra batch after hours, and sell it at a steep discount out the back door. Asked it this might explain why the Chintek E300 costs roughly $10 more than the Mrice E300, Ms. Chintek replied,

“That could be true! Our engineers only focus on design and quality. The factory side is responsible for assembly.”

Mrice didn’t respond to interview requests. The takeaway: In the cutthroat Chi-Fi racket, if you’re not cheating, you’re not trying. Save $10, and buy the clone.

Killer Sound

Even by Chi-Fi standards, the Mrice E300 offers an absurd price-to-value ratio. So, what do you get for your hard-earned $15? The audio blog consensus is that these buds project the classic V-shaped sound signature. Mrice (or Chintek) audio engineers essentially copied the “Rock” setting on many equalizers: fader bars up on the treble and bass, with the mids suppressed. While it’s true that the highs skew bright, and the lows have surprising impact and extension (almost woofer-like, really), the mids—and let’s face it, this is where the meat of the music resides—are in no way an afterthought. Listen to the E100s at a moderate volume level, the human loudness contourkicks in, and suddenly that signature V-tuning is softened, producing a sound that’s perceived as fairly balanced. Bottom line: Most people who sample these buds think they sound like fancy IEMs.

As mentioned, the high and low frequencies are enhanced. Some audio snobs will dismiss this sonic manipulation as artifice. But many more will find it exciting and, quite possibly, addictive. Likewise, certain critics will discern a slight degree of sibilance and deem it offensive. Ignore these trolls. The other detail worth mentioning is microphonics, those annoying mechanical vibrations transmitted through the cord via friction. It’s not airplane-earphone bad, but it’s noticeable. Memo to Mrice (or Chintek): a smidgen more insulation would be nice. And add several more inches of length to the cable while you’re at it. Consumers will gladly pay the extra 25 cents. To neutralize the microphonics, consider using a shirt clip (not included, but easy to add to your e-cart). Those criticisms aside, one nice thing about the cabling is its triangular shape. Besides being unique to the eye and nice to the touch, it’s a smart design choice which results in fewer tangles when you uncoil the headset.

One more thing: Yes, the silicon tips are crappy. These broad, S-M-L computer-generated sizes will make a Goldilocks fit impossible for some. The smart move is to swap them out for triple flanges. The accommodating shape provides a superior seal, increasing comfort and sound isolation.

Buds For All My Friends

Should you buy the Mrice E300s? At this price, you’d be a fool not to. Better yet, buy an entire case and give them away as a token of your largesse. People will think you’re some kind of audiophile bigshot. The return on your meager investment will be repaid many times over: free meals, exotic vacations, job promotions. Desirable members of your preferred sex will suddenly find you interesting. Don’t forget to buy a case for yourself, too. The build quality of these things isn’t half-bad (gold-plated 3.5mm plugs at this price-point?). Still, like all in-ear phones sans detachable cables, the wires that terminate at the bud will eventually fray, and the unit will fail. Which is OK. Because, hey, 15 bucks! Think of E300s as beater buds for audiophiles. These daily drivers are ideal for the gym (microphonics be damned), daily commutes or anytime you don’t want to risk trashing those precious JH Audio IEMs.

COMMENTARY: I am a huge fan of Skullcandy ear plugs because they produce great sound at all levels of the sound spectrum (trebble to bass) and they are solidly built. I don't like the flat rubber cords because they knarl up all the time, but they are strong and can take all the abuse you can muster. The Baldoor GranVela MRice E300 certainly appear to match the best in ear plugs if you believe in the hype that they compare favorably to the $1,149 JH Audio 16 Pro earphones. The best way to find out is to buy a pair fromAmazon.

Wall Street, it seems, sees the future much the way Netflix does—a future where Netflix takes over everywhere. Netflix CEO Reed Hastings said in an earnings call last month.

“Internet TV is growing around the world at incredible rates. And so we’re really propelled by that big macro trend.”

These skyrocketing expectations, and accompanying stock price, are in large part due to Netflix’s rapid expansion abroad—in particular, reports since Friday, May 22, 2015, that Netflix is in talks to expand into a huge new market: China. But as all conquerors know far too well, the path to world domination doesn’t come without resistance. Despite its aggressive growth, the company has already experienced pressure from its European markets to improve its service—and fast.

The Path of More Resistance

Netflix is growing, and quickly, even in its more mature markets like the US, but especially abroad. In the past few years, Netflix has been rapidly expanding to reach beyond US shores. The service now touts more than 20 million international subscribers in more than 50 countries, including the more recent additions of Australia, New Zealand, and even Cuba. By 2017, the company says it wants to be in 200 markets. But even in Europe, Internet speed and access has been a limiting factor. In a recent talk in Germany, Hastings was asked if Netflix would consider a download option so German subscribers wouldn’t have to be dependent on streaming. Hastings’ answer amounted to “no.”

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What’s more, if content is king, European subscribers have been markedly disappointed with Netflix’s offerings. In France and Germany, for example, the original content selections are not as wide as those offered in the US, in part due to licensing deals with local broadcasters and distribution rules in different countries. (To get around that, some are opting to use a VPN to access the American service, according to The New York Times.) European filmmakers are also unhappy that Netflix is encroaching on their turf—one recently shouting at the Cannes Film Festival that Netflix “will destroy the film ecosystem in Europe.”

Piracy is another major concern for Netflix abroad, according to the company’slatest letter to shareholders. In the Netherlands, for example, Netflix has seen competition from apps such as Popcorn Time that make illegal streamingas easy as a legal service. (Netflix has called the app’s success in the Netherlands “sobering.”) In fact, House of Cards has become hugely successful in China thanks to pirating.

More World to Conquer

Rather than being deterred, Netflix seems to be confronting those obstacles by growing even more. The streaming giant has plans to expand to Japan later this year, and analysts expect the company will try to break into the Chinese and Korean markets soon, too. For any company dependent on subscribers, the biggest fear in any single market is reaching the saturation point. For Netflix—and its share price—to keep growing, the company is betting it will need to continue to expand.

But a new market brings new demands. In its letter to shareholders, Netflix said that early signs indicate that promoting original content helps bring in new members. So, to get new subscribers in France, Netflix is launching an upcoming French-language drama Marseille, advertised as House of Cards for the French. But for an expansion into China, despite being a market already primed to love shows like House of Cards, censorship and stringent regulations on content could prove tough, which is why Netflix seems to be looking to find a partner to smooth its entry.

Netflix has enormously popular original content, the revenue to invest in new shows, and the data to predict the programming subscribers will like best. It’s a recipe for world domination. The company, and now Wall Street, just better hope it translates.

COMMENTARY:

Q1 2015 Earnings Report Highlights

Here are some of the highlights of Netflix earnings report compared to forecasts that were announced on April 15, 2015:

Subscribers: 62.30 million vs. 61.44 million forecast; US streaming net additions 2.28 million vs expectations of 1.8 million; international user additions 2.6 million vs. 2.25 million

Netflix shares increased by more than 12% in after hours, largely because of the big increase in new-user additions. It added a record 4.9 million new users globally in the last quarter, bringing total number of users to 62.3 million. Both its US and international user additions beat expectations.

Its total streaming revenue was largely in line with expectations, up about 32% from last year. The subscriber growth was higher than expected as its total paid members came in at 59.6 million, slightly more than the 58.7 million forecast. All in all, Netflix added about 14 million new users over the past 12 months.

Netflix said in a statement.

"We think strong US growth benefited from our ever-improving content, including the launch of the third season of House of Cards and new shows Unbreakable Kimmy Schmidt and Bloodline. In addition, retention continued to improve due to the growing value of our service overall. We are forecasting Q2 US net adds of 0.6 million, similar to the year ago quarter."

In Q4 2014, Netflix launched its streaming service in Australia and New Zealand as part of its plan to finish its global expansion within the next two years. Netflix said it expects to add 1.9 million international users in the next quarter.

Netflix also confirmed that it's seeking shareholder approval for a stock split. Its stock closed at $475.46 per share on Wednesday, April 15.

Here's what Netflix CEO Reed Hastings had to say about the quarter's performance:

"During Q1, higher-than-forecast net adds and US revenue, coupled with lower-than-forecast content spending, resulted in a US contribution margin of 31.7%, ahead of our 30.1% estimate. In 2015, we expect to run ahead of our US contribution margin growth target of 200 bps/year on average because a greater share of global and original content costs will be absorbed by existing and new international territories as we continue to expand globally (since we allocate global content costs by geography).

In addition, starting in Q2 we intend to shift some of our US marketing budget to international to take advantage of the substantial available growth opportunities. This, in the short term, drives down international contribution profits and drives up US contribution profits. We are still targeting 40% contribution margin in the US in 2020.

Our international segment was fueled by continued strong growth across our 50+ countries as well as a successful March 24 launch in Australia and New Zealand, which adds about 8 million1 broadband households to our addressable market. In ANZ, Netflix benefited from high consumer awareness, a fervent fan base for original series like House of Cards and Orange Is The New Black and operator relationships with Optus and iiNet, the second and third largest broadband providers. We expect international Q2 net adds of 1.90 million, up 70% vs. last year. Later in 2015, we will launch additional markets, starting with Japan.

The strong dollar hurt financial results during the quarter, negatively affecting International segment revenue (lower by $48 million y/y using Q1 2014 forex rates) which carried through into a $15M negative forex impact on international contribution loss. These forex headwinds offset better than expected subscriber growth to result in contribution losses close to our expectations. As a reminder, we absorbed on average 5% higher VAT rates across our European markets starting January 1. We’ll have a full quarter of content expenses in ANZ in Q2 and expect the international segment loss to grow to $101 million, increasing throughout the back half of 2015 as we expand to additional markets (consistent with what we’ve said).

Our strong performance led to overall operating income that exceeded our projections ($97m actual versus $79m forecast). Net income was negatively affected by currency-related transaction losses included in other expense; excluding these forex losses, Q1 EPS would have been $0.77 vs. our $0.60 forecast and our actual EPS of $0.38."

Netflix reported total worldwide streaming revenues of $1.4 billion for the quarter, up 7.28% from Q4 2014 and up 31.33% from Q1 2014. U.S. streaming revenues for the quarter were $985 million, up 7.41% from Q4 2014 and up 23.28% from Q1 2014. International streaming revenues for the quarter were $415 million, up 6.9% from Q4 2014 and up 55.43% from Q1 2014.

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Profitability and Cash Flow Are Down

Netflix's operating income for the quarter was $97 million, up 49.23% from Q4 2014 and slightly down 1% from Q1 2014. Net income for the quarter was $24 million, down 71.1% from Q4 2014 and down 54.7% from Q1 2014.

Netflix's reported a free cash flow deficit of $163 million for the quarter, this was up 114.86% from the free cash flow deficit of $74 million reported in Q4 2014.

Both profitability and free cash flow have been negatively impacted by higher content and marketing costs incurred to improve its film entertainment offerings and higher marketing and promotions costs in order to increase subscriptions and streamings, particularly as it expands into new markets like Australia, New Zealand and Japan.

Netflix Plans To Enter China

According to Bloomberg, Netflix is in talks with Wasu Media Holding Co (000156.SZ), a Chinese media company backed by Jack Ma and other possible partners as it seeks entry into the country’s $5.9 billion online video market, according to people familiar with the matter.

Netflix has held discussions with companies including Wasu Media Holding about forming a partnership, according to the people, who asked not to be identified because the talks are private. Netflix plans “to be nearly global by the end of 2016,” a spokeswoman, Anne Marie Squeo, said in response to questions about a possible China partnership.

Entering China would allow Netflix to take advantage of what’s forecast to be explosive growth in online television in the nation of 1.4 billion people. The market is expected to almost triple to 90 billion yuan by 2018, according to Shanghai- based Internet consultant IResearch.

A local partnership would be essential given the Chinese government’s strict controls over licensing for online content. Netflix wants a partner that has licenses for content on all devices — including mobile phones, computers and set-top boxes, according to the people. China’s State Administration of Press, Publication, Radio, Film and Television has given Internet TV licenses to seven companies, including Wasu.

Wasu didn’t immediately respond to an e-mail seeking comment. Two phone calls to Wasu’s general line weren’t answered.

Courtesy of an article dated May 19, 2015 appearing in Wired, the letter dated April 15, 2015 to Netflix Shareholders, an article dated April 15, 2015 appearing in Business Insider, and an article dated April 16, 2015 appearing in Informitv, and an article dated May 24, 2015 appearing in The Day